401k for Generation Y
According to NAS Insights, Generation Y, those born between 1977 and 1994, make up over 20% of today’s population, or 70 million people. When you talk to Generation Y how many of them do you think are already saving money for retirement? Not as many as there should be. If you look at articles that have been written about this generation the trend seems to be that Generation Y is looking for instant gratification in all parts of their life. Whether this is true or not is open to discussion, but it makes sense in this case. If you analyze a 401k plan there is no instant gratification. A 401k plan is something that is ensuring that you will be able to support yourself when you retire. For Generation Y that may seem to far away to be of any immediate concern.
Another reason Generation Y may not be contributing to a 401k could be because they are just starting out in their careers. Usually it takes time to work up to the salary graduates think they should be earning. When you add student loans and other debt into the mix it would makes sense why this generation may not feel like they have enough money to contribute to a 401k. With more and more graduates leaving the confines of their college campuses with some pretty significant student loan debt, it is no reason why many young professionals are choosing to abstain from participating in a retirement savings plan either with their company or individually.
Whatever the reason Generation Y may not want to invest in a 401k plan there are so many important reasons why investing early is so important. With just a small amount put away every month, it can lead to a secure financial future. It is worth the investment and the time it takes to learn about a 401k plan. For those who don’t have a 401k option there are many great alternatives for retirement investing, such as Individual Retirement Accounts (IRAs).
Companies that sponsor retirement plans for their employees may find Generation Y is reluctant to actively contribute than other employees. In such cases it is incumbent that they present a compelling case to their Generation Y employee base about the benefits in investing in their financial future early. Although these young professionals may ultimately opt out of funding their retirement accounts for the time being, it is well worth the effort to encourage and demonstrate the significant financial advantages they may experience in their later years by investing relatively small amounts today.
